Correlation Between De Grey and Gold Road
Can any of the company-specific risk be diversified away by investing in both De Grey and Gold Road at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining De Grey and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Gold Road Resources, you can compare the effects of market volatilities on De Grey and Gold Road and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in De Grey with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Gold Road.
Diversification Opportunities for De Grey and Gold Road
Very poor diversification
The 3 months correlation between DEG and Gold is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and De Grey is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on De Grey Mining are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of De Grey i.e., De Grey and Gold Road go up and down completely randomly.
Pair Corralation between De Grey and Gold Road
Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.98 times more return on investment than Gold Road. However, De Grey Mining is 1.02 times less risky than Gold Road. It trades about 0.03 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.02 per unit of risk. If you would invest 124.00 in De Grey Mining on August 25, 2024 and sell it today you would earn a total of 25.00 from holding De Grey Mining or generate 20.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Gold Road Resources
Performance |
| Timeline |
| De Grey Mining |
| Gold Road Resources |
De Grey and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Gold Road
The main advantage of trading using opposite De Grey and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Gold Road can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gold Road will offset losses from the drop in Gold Road's long position.| De Grey vs. EVE Health Group | De Grey vs. Aussie Broadband | De Grey vs. Capitol Health | De Grey vs. Singular Health Group |
| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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